Can the British Pound hold steady near 1.3400 amid BoE rate hike expectations?

• Little movement in GBP/USD leaves the pair near 1.3390 during Asian trading on Monday.
• A November BoE increase in the Bank Rate to 4.0% is already heavily factored into market pricing.
• Thursday’s BoE rate announcement is the next focus for traders, with US employment figures to follow.

A wait-and-watch mood keeps GBP/USD largely unchanged around 1.3390 in Monday’s Asian session as traders hold back ahead of this week’s major events. Thursday brings the Bank of England (BoE) interest rate announcement, followed on Friday by US employment figures for October.

Hawkish expectations for the BoE could lend the British Pound (GBP) some support against the US Dollar (USD). In a Reuters poll, economists forecast an increase in the Bank Rate from 3.75% to 4.0% at Thursday’s November policy meeting. Such a move would mark the first rate rise since August 2023, when inflation remained above the BoE’s 2% target.

Alexander Harvey, UK economist at consultancy Oxford Economics, said: "While we don't expect a clear steer from the Committee on how many hikes they're planning, it's possible that the meeting minutes or Bailey ... signal that Bank Rate is unlikely to reach the level that is priced in by financial markets,"

Also on this week’s watchlist are the US midterm elections and the employment report. Forecasts point to a September Nonfarm Payrolls (NFP) increase of 65,000 and an unchanged Unemployment Rate of 4.2% for the same period. Evidence of a strengthening US labour market could bolster the Greenback, putting near-term pressure on the major currency pair.

Can GBP extend gains with BoE tightening already priced in?

The latest UK Budget is viewed by OCBC strategists as an important stabilising influence on the Pound, which has “held up better than expected despite the fiscal strain from higher energy costs,” they say. In their assessment, the Budget “avoided adding to those concerns,” since it “stayed within the fiscal rules and preserved GBP15bn of headroom against the stability rule, even after absorbing some of the impact from the Middle East conflict.”

Describing the wider UK environment as one that “remains relatively supportive,” OCBC notes that growth has “proved resilient,” and that the OBR has raised its “2026 growth forecast to 1.2%.” The strategists believe “greater political stability and fiscal discipline should continue to offer GBP some relative support,” adding that “closer UK-EU economic ties could provide an additional medium-term tailwind.”

Yet OCBC warns that “the easy gains may be behind us.” The bank observes that markets are “already pricing an aggressive Bank of England tightening cycle, with a November hike heavily discounted and substantially more tightening priced into 2027.” Given that there is “plenty of tightening already in the price,” its conclusion is that “the bar for the next leg higher in GBP is getting increasingly high.”

Does Greene’s wage warning leave little room for GBP rate-cut hopes?

A steady hawkish message, rather than a more forceful one, emerges from BoE’s Greene: the FXS Speechtracker score of 7.4/10 matches Greene’s historical average exactly. Wage disinflation has stalled above levels consistent with 2% inflation, Greene stresses, while arguing that policy should act proactively against second-round inflation risks. Together, these views favour keeping UK rates elevated for longer, offering modest support to GBP.

Little willingness to ease policy in the near term is suggested by Greene’s assessment that second-round risks are greater than previously believed. This comes even as forward-looking indicators suggest pay growth closer to 3.5% and the economy displays unexpected resilience. A signal that labour market slack may already have peaked also highlights the possibility of renewed wage pressures. The resulting steady-to-hawkish message restrains expectations of aggressive BOE rate cuts and lends GBP support against its peers.

Technical Analysis: Can GBP/USD sustain its modest near-term bullish bias?

Trading above both the 100-day simple moving average (SMA) and the Bollinger Bands’ middle SMA leaves GBP/USD with a modestly bullish short-term outlook on the daily chart. Further gains remain possible with the pair below the upper Bollinger band. Meanwhile, a Relative Strength Index (14) reading near 56 signals a positive tone without indicating overbought conditions.

The upper Bollinger band around 1.3450 provides the first upside hurdle, where selling could begin to meet the recent advance. Initial downside support comes from the 100-day SMA at 1.3385, ahead of the middle Bollinger band at 1.3310. Should the correction deepen, the lower Bollinger band near 1.3175 offers a further cushion.

(The technical analysis of this story was written with the help of an AI tool. Know more.)